AMC Says ‘Almost All’ U.S. Theaters Will Reopen in July

Supposedly Melvin (the fund in question) closed its position in Gamestop. But some people think that's a lie.
So steep were the losses -- about 30% through last week -- that Melvin on Monday turned to billionaire hedge fund founders Ken Griffin and Steve Cohen -- Plotkin’s former boss -- to shore up the firm.

As of Tuesday, the fund’s losses had increased even with the portfolio repositioning, though investors wouldn’t say by exactly how much for fear of angering the money manager, which they expect can still fight its way back...

Investors caught in a short squeeze can close out bets and eat their losses, or try to ride out the price surge -- typically requiring they put up more money.

Melvin’s cash infusion was almost unheard of in hedge fund land. Griffin, his partners and the hedge funds he runs at Citadel threw in $2 billion and Cohen’s Point72 Capital Management, which already had about $1 billion invested in Melvin, ponied up another $750 million.

Cohen, one might argue, was bailing out his own investment. For Griffin, it was a rare opportunity to invest in a talented manager on the cheap. Both firms got a minority revenue share from the firm for stepping in.
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https://www.bloomberg.com/news/arti...geon-melvin-capital-in-warning-to-wall-street

Based on what I'm reading, I dont think the redditors even care if they lose the money. The point is to inflict pain. It's being called an "anger bubble." A lot of them say they're just investing their stimulus checks.
 
ahalpert said:
... I dont think the redditors even care if they lose the money. The point is to inflict pain. It's being called an "anger bubble." ...
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Yes, I suppose we all had/have thoughts like that when we are young. Get the big guy. Mostly you end up hurting yourself and not the big guy. I miss those days of youthful exuberance. I like the David and Goliath aspect. Let's see what happens.
 
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Holy **** - someone posted on twitter that their bank is prohibiting trades in gamestop and amc. How can that be legal...

https://mobile.twitter.com/williamlegate/status/1354500987617218567/photo/1

People estimate the losses of Melvin Capital (the big short of gamestop) to be like $8B or 80% of assets. Gamestop stock plummeted after the news broke that Melvin had closed its position. But now it has rallied, so if Melvin leaked a lie they are goners. And if they tried to short it again they may also be goners. And either way they'd probably be open to an SEC investigation for manipulation
 
It is illegal to manipulate a market or stock. If there was someone or a group of persons that conspired to manipulate a stock, they can take action. The reddit people are in jeopardy.

I personally know an individual who was employed at an electronics company (not an executive, just a regular employee). He oh so stupidly sold short in a big way on his companies' stock just before it plummeted. He went to jail.
 
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Somebody must be hoping for a bailout. Reddit discussions alone shouldn't generate such volume. As someone who dabbled in swing trading a few years ago, I'll attest that this is not for the timid.

Or poorly funded.
 
But this happened twice in just a few days. It indicates planning, which indicates conspiracy to manipulate, which indicates someone is in trouble.
 
Paul F said:
It is illegal to manipulate a market or stock.
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I think this is the whole point of this activism. Large hedge funds have been more or less doing this through short selling and there's an anger directed towards them for this reason.

People are going to be down real money though.

JB
 
Paul F said:
It is illegal to manipulate a market or stock. If there was someone or a group of persons that conspired to manipulate a stock, they can take action. The reddit people are in jeopardy.

I personally know an individual who was employed at an electronics company (not an executive, just a regular employee). He oh so stupidly sold short in a big way on his companies' stock just before it plummeted. He went to jail.
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That sounds more like insider trading.

Someone wrote that there's nothing illegal about the reddit move. I think that in practice it's no different from what jim Cramer does telling people he bought a stock and you should too.

And the thing about freezing the stock trades - it only happened on retail investor channels. While retail investors were shut out, ten-thousand block shares of gamestop continued trading. In other words, the stock wasn't frozen. Institutional investors were allowed to make moves while the reddit mob was held at bay. If you were looking for proof positive that wall street is rigged...
 
This is one of the reasons I dislike the stock market and publicly traded companies. It's ALL market manipulation. What else explains 2020 and right now?

One of my friends said his brother tried to sell some of his GS stock yesterday and whoever he trades with would not allow him to sell for more than 50% over his purchase price that day(i.e: if he bought at $60 he could sell for no more than $90, even though it may have been at $200+). I've never heard of such a thing.

But I have seen institutions that locked stocks out and you could not purchase on their platform. I bought into an oil stock several years ago and I had to open an account with another trading institution to buy it, because who I was with had the stock(actually EFT) locked out for purchase. And it's a well known legit fund. You could look it up, see what it was trading for, etc. but when you tried to put in a buy order: DENIED. This was probably five years ago and it's still locked out with this particular institution. Even my advisor doesn't know why and couldn't explain it.
 
ahalpert said:
That sounds more like insider trading.

Someone wrote that there's nothing illegal about the reddit move. I think that in practice it's no different from what jim Cramer does telling people he bought a stock and you should too.
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Yes, my example was insider trading. It was just an example that the SEC will go after the little individual nobody.

If the reddit folks talked about buying the stock to push it upward to hurt hedge funds, that is a conspiracy to manipulate a stock and that would be illegal. That is not the same as Jim Cramer saying here's a good stock, he bought it and you should to; at least not in the eyes of the SEC. If it was a conspiracy (and even if it wasn't), the hedge funds aren't going to take it lightly. They have resources and a relationship with the SEC and lawyers and money and so on. If there is an action to be taken, it will be taken.
 
John Brawley said:
I think this is the whole point of this activism. Large hedge funds have been more or less doing this through short selling and there's an anger directed towards them for this reason.

People are going to be down real money though.

JB
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Ok, I don't understand hedge funds, nor do I care to because it seems like so much manure. At the same time, what harm is there is selling a stock short? If one sees a company is in trouble, and someone is sure the stock will go down, why not play the downside as well as the upside? Is there some direct harm to the company or investors?

Yes, I understand, it's not investing, it's just betting. But does it cause any direct harm? Why the activism?

It seems like so much nonsense to allow people to sell short, but I'm missing something here in regards to the activism.
 
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Paul F said:
Ok, I don't understand hedge funds, nor do I care to because it seems like so much manure. At the same time, what harm is there is selling a stock short? If one sees a company is in trouble, and someone is sure the stock will go down, why not play the downside as well as the upside? Is there some direct harm to the company or investors?

Yes, I understand, it's not investing, it's just betting. But does it cause any direct harm? Why the activism?
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I think it's a few issues.

If a large hedge fund starts shorting a stock and others see that trend and also start to short it they are going to move the price downwards. It starts a cycle of suppressing the stocks price. The price no longer reflects the true value, it's been manipulated into a lower position. Sure you could argue that the sentiment that mean someone thought the current price is over valued this trigging the short in the first place may be correct, but the trend tends to overcompensate. This can then mean that the heavily shorted stock is now devalued and what's more, it makes it harder for them to raise finance and changes the financial metrics. A lot of stocks eventually recover their share price, but these Main Street guys are actually doing what institutional hedge funds have been doing for years, in effect piling onto a stock to make money. They're just flipping it back onto them.

In the case of the game stock shares I believe it was targeted for this activism because it had been so heavily shorted, more than even the number of shares that are available to purchase, thus was a good candidate for flipping those in a short position. Then it becomes a waiting game, because the higher the stock goes, the more multiplying the losses are to the hedge fund. Sadly it means a lot to people will probably loose money on this as well.

Maybe take a look at the background a bit more, but to me, from a distance, there's great distaste that institutions are able to gamble essentially (shorting) and trash stocks by heavily shorting them because they themselves are multi billion dollar funds and they have the power to do so because of the funds they commend, but then when the same institutions collapse or go under, they generally get a bail out. Which or course doesn't happen for the Main Street investor.

JB

EDIT

Found this good explanation on the NY times of how shorting works and why the hedge fund looses money.

"Short-selling works this way: An investor, who expects a stock price to fall, borrows shares of that company from another investor for a fee and sells it immediately, hoping that when the price does fall, they can buy the shares back cheaply, return them to the owner and pocket the difference.

It’s a risky trade. If the stock rises, the short seller is exposed to losses that are theoretically infinite. (After all, share prices can keep rising, while they can only fall to zero.) For that reason, when a bet goes wrong, short sellers rush to repurchase the shares they borrowed so that they can return them and exit their trades — a process known as covering."
 
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Yes, what John said. And the thing is - Melvin Capital's (the hedge fund in question) large short sell bet against the company was somehow publicly visible (otherwise the redditors wouldn't have known about it.) And it's that public visibility of a negative bet from such a large, respected firm that can lead to a self-fulfilling prophecy of doom. Which is a classic way large investors can manipulate market dynamics.

And the problem with short selling in particular is that if it's really successful and the company goes belly up, lots of people lose their jobs.

But on top of that, it seems that these traders are motivated by anger at Wall Street on account of the Great Recession.
 
Reading the news about what people are posting, most comments seem harmless and the usual sort of comments that people would make on a stock platform, pushing to drive a stock up. No harm. No foul. This one is fun to watch. Break out the popcorn.
 
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With multinational trading platforms on block-chain servers, there's very little SEC - or anyone else, for that matter - can do about it. Besides, the short-selling has always been legal and any steps taken to disrupt it will cause more damage than benefit. The UK tried to ban some short-selling during the credit meltdown of 2008 and pooped in its pants. The practice to squeeze out short-sellers is also legal and is often practiced by the governments and the multi-national entities like OPEC+. And what the Saudis and the Russians do is rarely covered in the media. Likewise, the national currencies are a guaranteed subject of interference from Central Banks.

What's likely happened with GameStop was that it started like a short squeeze but then gained so much trading volume, it attracted the day traders wanting to skim even the smallest moves. This is not a real positional swing trading but more of a momentum trading where the interested parties look at only the buy-sell ratios and the overall volume movement.

And, while $200M in trading volume for one stock is a lot, the S&P E Minis generate a $100B on an average day. That's where the big boys play.
 
Here's a good op-ed/explainer from The Hill (online political newspaper):


But right now (after this video aired), I think the #1 cause of anger will not be the short selling and historical hedge fund behavior but the extraordinary means that were taken to prevent retail investors from competing by the same rules (prohibiting trades, banning the subreddit server). Truly gobsmacking.
 
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Oh my god this is so funny. The wallstreetbets reddit is full of movie clips captioned to tell their triumphant story (avengers endgame, 6th sense, 300), but the funniest is from Les Miserables:

https://www.reddit.com/r/wallstreetbets/comments/l6qay0/do_you_hear_the_autists_sing

"Will you join in our short squeeze?
Who will be strong and HOLD with me?"

Anyways it doesn't look like a pump and dump. The goal is to inflate the share price and hold it at a high value while you wait for the short sellers to fold. The short sellers are paying high interest rates on the stocks they borrowed to sell short, so they can't wait forever (but the longs can).

Meanwhile there's a host of institutional barriers erected to foil the redditors (who refer to themselves as autists and retards, perhaps because their strategy is ostensibly irrational, I'm not sure). There was the trading halts, the downed brokerages, the prohibitions on trading these particular stocks on the retail trading apps, the SEC is supposedly investigating their reddit, and now apparently Robinhood will force options that expire on friday to close (which I assume means some of these buyers will have to sell on friday). Not sure if Robinhood is doing that to protect themselves or the hedge funds, but I'm rooting for the retail investors.

Someone will make a movie about this
 
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